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Tom Fischer: Why gold's contango suggests central bank interference
9:50p ET Monday, September 23, 2013
Dear Friend of GATA and Gold:
Another academic study touching on gold market manipulation has been published this month, this one by Tom Fischer, professor of financial mathematics at the University of Wuerzburg in Germany. Fischer argues that gold's scarcity makes it such a superior currency that backwardation in its market -- when the spot price is higher than the price for future delivery -- should be normal and that contango, when the futures price is higher than the spot price -- should be rare.
Fischer argues that the long period of contango preceeding the current turbulence in the gold market is evidence of interference in the market by central banks through their leasing of gold.
As much as our camp appreciates acknowledgment of central bank interference in the gold market, your secretary/treasurer often disputes the common contention repeated by Fischer -- the contention that "you can't print gold," or, as Fischer puts it, "A central bank cannot necessarily cough up just any needed amount of gold as it cannot simply print it up when required."
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To the contrary, insofar as central banks may lease virtually infinite amounts of gold as mere claims to metal that doesn't necessarily exist, and insofar as bullion banks may create similarly unbacked claims to gold through their own fractional-reserve gold banking system, claims that are seldom exercised so as to cause metal to leave any central bank or bullion bank vault, then imaginary "paper gold" in fact may be almost as easily created as ordinary fiat currency.
Of course this assumes that no free-market organization exposes the scam so well that gold investors are induced to redeem so much "paper gold" for real metal and remove so much from the banking system that the "paper gold" system defaults. (GATA is working on that part.)
In any case, quoting former Federal Reserve Chairman Alan Greenspan's famous admission to Congress that the purpose of central bank leasing of gold is to suppress its price, Fischer is certainly correct to identify such leasing as the mechanism by which gold has been devalued to camouflage the devaluation of fiat currency, and his study substantially increases the legitimacy of the issue.
Fischer's study is headlined "Why Gold's Contango Suggests Central Bank Interference" and it's posted in PDF format at GATA's Internet site here:
http://www.gata.org/files/TomFischer-GoldContango.pdf
Thanks to the Perth Mint's Bron Suchecki for calling attention to Fischer's study.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Join GATA here:
Louis Boulanger Now Seminar
Visitors Center, Holy Trinity Parnell
Auckland, New Zeland
Sunday, October 13, 2013
http://www.gata.org/files/GATAInNewZealand.pdf
Gold Investment Symposium 2013
Luna Park Conference Center, Sydney, Australia
Wednesday-Thursday, October 16-17, 2013
The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013
http://www.cambridgehouse.com/event/silver-summit-2013
Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013
New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...
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